Turning Constant Change into Business Opportunity: The Role of IT in the Modern Day Supply Chain

By Neil Hampshire, SVP & CIO, ModusLink [NASDAQ:MLNK]

Neil Hampshire, SVP & CIO, ModusLink [NASDAQ:MLNK]

When Ancient Greek philosopher Heraclitus now-famously noted that “change is the only constant in life,” he couldn’t have possibly known how much that statement would resonate thousands of years later.

Some may argue that we’re in a greater stage of change than ever before: consumerism, globalization and technology are driving dramatic shifts in our world every day. The global population has grown from one billion people to seven billion in just 200 years, and there has been more information generated in the last 10 years than was accumulated in the entirety of human history before that. The rise of the IoT will only increase the rate at which information and data is created, with Gartner predicting 27 billion IoT devices in use around the world by 2020.

"No one technology will win, but instead the most cost efficient, successful supply chains will deploy a complex web of interconnected solutions"

This constant state of change is having a direct influence on the manufacturing and logistics industries—requiring a new supply chain that not only responds to, but is optimized for, a smarter data-driven world. As technologists, it’s our job to help successfully usher in this change by turning it into business opportunity.

Embrace the End-To-End Value Chain

Today’s supply chain is much different than it was just 10 years ago. The traditional view of the supply chain that encompassed common 3PL functions like procurement, manufacturing, distribution and delivery overlooks wide swaths that are present in what organizations need today. For example, managing access to and monetizing software on a piece of hardware long after it’s been put into customers’ hands or handling the influx of returns that now happen as more consumers shop online are two common needs today that barely existed just 15 years ago.

While digital and physical supply chain services have traditionally been separate, a number of technology advancements in the IoT, big data and robotics sectors, among others, are driving innovations that are eradicating the digital/physical border. When you embrace the digital and physical supply chain as a single entity, it transforms into a true value chain. The two modes of supply chain can interact with one another to form a seamless and communicative process where employees and machines work to accomplish the same goals, and data is gathered throughout both modes and then analyzed and applied to make supply chains—and most importantly, the business—more efficient moving forward.

Manage Transformation

Evolving from a disparate supply chain to a fully functioning, digital and physical value chain does require work—and in many organizations, it will demand sizable transformation. Fortunately, executives appear ready for the change. Forbes contributor Gil Press suggests that as early as next year, 67 percent of CEOs of Global 2000 enterprises will have digital transformation at the center of their corporate strategy.

This will mean that as IT leadership, you will have to have a seat at the table and will play a critical role in leading the future of the company. It will be your responsibility to cut through the clutter of technology buzzwords and instead focus on what all of the innovations really mean for the business.

For example, understanding that cloud provides considerable flexibility and a more scalable environment is hugely important for those of us in IT, but the business team will just want to know how it supports broader objectives.

Managing digital transformation will require an in-depth understanding of those business objectives, a thoughtful approach to identifying how emerging technologies can truly help at reaching them, and ultimately, a tactical plan to execute. Consider, for example:

• IoT—Embracing the IoT for tasks such as machine-driven replenishment and service and performance monitoring.

• Automation—Integrating bots and corresponding apps into operational workflows, taking care of everything from order entry to line-side replenishment.

• Artificial Intelligence—Applying it in the way you ship and deliver products, predicting demand and device failures as well as learning what customers want and need.

• Big Data—Working to capture their existing data and make it actionable and productive across operations.

At ModusLink, we are constantly assessing these and other new technology solutions and helping our clients determine where they can leverage them to bridge gaps that exist in their supply chains, whether it is deploying a new ecommerce platform to help a startup quickly and easily expand into a new region or country; automating sorting in a distribution facility so packages arrive in customers’ hands faster; or helping a multinational B2B tech company gain greater control over its millions of software licenses currently in market.

Cast Out One-off Solutions

It can be tempting to look for quick fixes to supply chain challenges—and there is no shortage of technologies and vendors that claim to solve problems in such a manner. Building a solution internally often seems like a quick fix, but over total lifetime the cost to manage, develop and support it often massively outweighs the lower sticker price. With so much change on the horizon, it is critical to take a long-term view of any technology strategy. This is because no one technology will win, but instead the most cost efficient, successful supply chains will deploy a complex web of interconnected solutions.

For some companies, this could be as innovative as considering how, for example, their entire customer experience will be transformed as IoT connectivity can enable smoother order replenishment and lessen service calls. For others, and in the case of many of our clients, it could be as practical as leveraging a single global instance of SAP surrounded by best-of-breed systems to run highly efficient, operational processes that significantly reduce costs.

The many technology changes impacting our industry don’t come without certain challenges. But, as technologists who understand it all best, we’re in a unique position to see it for what it really presents: opportunity.